Business Model Framework Proposal for Internet of Things: A theoretical research paper on Internet of Things from a business perspective

Katrina Lynn Fugl

Student thesis: Master thesis


The thesis focuses on researching the Internet of Things (IoT) from a business perspective. The initial research stage pinpointed a gap in research in this area, especially surrounding the concept of IoT business models. Much theory surrounding the subject highlights the need to research possible IoT business model frameworks, as traditional business model theory falls short of incorporating the complexity of the synergies and dynamics within an IoT ecosystem. In the initial literature search, only three relevant frameworks contributed to the concept of creating and evolving a business model framework, which support the IoT concept, namely Sun et al.’s (2012) “A holistic approach to visualizing business models for the internet of things”, Turber et al.’s (2014) article “Designing Business Models in the Era of Internet of Things – Towards a Reference Framework”, and Westerlund et al.’s (2014) article “Designing Business Models for the Internet of Things”. However, after researching the concept of IoT from a business perspective in-depth, I identified some important criteria’s which the previous mentioned IoT business models failed to incorporate, which included the complexity of the overall IoT value chain; the organization, industry and ecosystem, as well as different stages of the ecosystem, due to the instability of the highly innovative environment and the adoption to this. To incorporate all these aspects, I therefore developed an IoT business model framework, based on the dynamics and complexity of the IoT concept, which incorporates the ecosystem synergies, stages, and business strategies and provides companies with a flexible approach that takes all essential aspects of the IoT concept into perspective. The IoT business model framework is built around the IoT value chain, which includes the organization itself, the industry it is part of, and the ecosystem(s) the organization becomes a part of when incorporating an IoT business strategy. The framework furthermore seeks to clarify all value creation and capture activities and flows, but also the challenges and barriers associated with these, by clarifying the “Who?” “What?” “When?” “Where?” “Why?” and “How?”. But identifying all these aspects throughout the IoT value chain the model creates a sound foundation for a company to be able to understand, analyze, communicate, and manage strategic-orientated choices surrounding the IoT concept, and throughout the ecosystem. Thought the model provides an extensive overview over these essential components, the model can also be formed to only highlight the components essential to the individual company, as it offers great flexibility, which is highly valuable in the fast evolving, dynamic and innovative IoT phenomenon.

EducationsMSc in Business Administration and Information Systems, (Graduate Programme) Final Thesis
Publication date2015
Number of pages100